This is CEO Strategist’s initial publication of “The Howl” a monthly newsletter that will discuss relevant issues in wholesale distribution. It will include reader input, questions, comments and guest articles. Tips on best practices in wholesale distribution, sales management, leadership, and even some everyday stuff like tips on improving your golf game.
This initial groundbreaking issue contains:
What’s the Rave about RONA?
Client Corner - Questions and comments from the industry – The Cry-Baby Sales Person
Are Employees Really Your Most Precious Asset?
I have yet to walk into a distributor during my thirty five years in the industry that didn’t have some form of this statement about the value of employees printed somewhere. A mission statement, in their employee handbook, on a poster on the wall, the company newsletter and even in the strategic plan for the very few that actually have a strategic plan. However, when I think about it, I almost want to puke. Why? Because the majority of the distributors that make this claim have no idea what it really means to treat their employees like their most important asset.
Listen carefully, if you don’t treat your employees like your most important asset - Then they certainly will not act nor will they perform like your most important asset. And that means you are missing the greatest opportunity in the world to leverage talent in creating competitive advantage in your market place. Make no mistake, it is your employees that create core competencies and core competencies create competitive advantage.
Kudos to every distributor out there that has figured this out but you are in the minority. Treating your employees as your most precious asset is not a mystery. It’s not rocket science. It’s actually fairly simple. WARNING! Lip Service about it isn’t good enough. Putting it in your mission statement, posting it on the wall, publishing it in the company newsletter doesn’t mean crap if you don’t act on it. Acting on it means spending money. Invest in the greatest power you have for achieving success. Your employees. Don’t cut training and education from the budget every time there is an economic hiccup.
Examine the following tips and I think you’ll be able to figure it out
Do these things and you will be on your way to becoming Employer of Choice. Your recruitment and retention problems will be minimal. Employees will excel. They will release that discretionary energy and apply it to creating competitive advantage. Training your employees will increase their drive for success. Fairness creates happy employees. Happy employees create satisfied customers.
What’s the Rave about RONA?
To start with I must admit that I am not a big fan of RONA. I know many of you out there including some clients that I have worked with are religious about RONA. Some like Rice and some like potatoes. It certainly has its attributes. It’s about value based management.
RONA stands for Return On Net Assets. This equals the Net Operating Profit after tax divided by the sum of cash and working capital requirements plus fixed assets. It takes into consideration the assets a company uses to achieve its success.
RONA = Net Income
Fixed Assets + Net Working Capital
The higher the return, the better the profit performance for the company.
WHY I AM NOT A BIG FAN of RONA
Several things keep me from being a big fan of RONA.
1. It can create a negative incentive for individual managers to avoid investing in growth. This is especially true when their bonus or incentive is tied to RONA. Branch managers, middle managers and other managers may make decisions based on RONA that are not in the best interest of the company’s long term growth strategy. A manager could elect to make his personal bonus on the backs of his employees by running too lean. This could cause service problems, customer complaints and quality problems just to mention a few. There are other measurements that can be used just as effectively but I’ll leave that discussion up to you and your CFO.
2. It is an all embracing process that often requires a culture change. This almost always requires consulting assistance. (Good for our business)
3. It can seem complex to middle management. Actually for most of management that are not trained in finance.
4. Requires diligent, explicit CEO and Board support
5. Specific RONA value based management training is essential By the way- just for the record - the perfect value based management system has yet to be invented or discovered. All methodologies have their drawbacks.
Client Corner- A question from Joe
Rick, I have a salesman that does a pretty good job but he is always whining about something. He takes up a tremendous amount of my time, inside sales and anybody else that will listen. I don’t want to fire the guy because he does put up decent numbers. What do you suggest?
Joe, VP of Sales, Building Products Industry
Wow! If I used this term with my wife she’d probably take my head off but you have what is typically known as a high maintenance “Cry Baby Salesperson”
This condition is known as “High Affliative Needs”. It can be a sales person’s downfall. We all have affiliative needs but for a sales person, if they become excessive, they can undermine any real talent they have. This type of person is generally a very likable person and can strike up a conversation about anything, anywhere. That is why they seem to achieve relative success in field sales. But remember, if this person is wasting your time due to this condition, chances are, some or most of his customers feel the same way. You need to find out.
The question you need to ask yourself: “Is this sales person maximizing the full potential of his territory in market share, profitability and share of spend at existing accounts? The answer to that question will determine whether you must coach, mentor or manage this individual.
If he is attaining peak territory performance. Become a confidant and be totally honest with him. When his points are valid – acknowledge that. When he is just whining - let him know. Be constructive and supportive. Encourage him. Give him examples and help him come to the same conclusions about each situation as you do.
Since you stated he put up decent numbers, it sounds like he is worth your investment of time. Start with the numbers. What should peak performance in his territory be? Set some stretch goals. Work with him utilizing your sales expertise in targeting, goal setting and action planning to achieve these stretch goals. During the process, his high maintenance, affiliative needs should be apparent. Demonstrate how they can interfere with the achievement of his goals.
Some managing is certainly mixed in with the coaching process but if coaching doesn’t do the trick and he is actually performing below territory expectations it may be time to get tough. Stick with objective facts. Stick with the numbers. Clearly define expectations and stick to them. You just might have to throw him off the bus.
Dr. Rick Johnson (email@example.com) is founder of CEO Strategist LLC. an experienced based firm specializing in leadership for wholesale distribution. CEO Strategist LLC. works in an advisory capacity with company executives in board representation, executive coaching, team coaching and education and training to make the changes necessary to create or maintain competitive advantage. You can contact them by calling 352-750-0868, or visit http://www.ceostrategist.com for more information.
Rick received an MBA from Keller Graduate School in Chicago, Illinois and a Bachelor's degree in Operations Management from Capital University, Columbus Ohio and his PhD in strategic Leadership. http://www.ceostrategist.com